Monday, May 14, 2012

Robin Hood University

Three stakeholders pay for higher education: students, family and governments.  The problem in higher education finance stems from the problem that these three stakeholders try to cut a deal amongst themselves, but Robin Hood University can re-allocate resources at will.

The only way to "fight back" is to raise the cost of capital because Robin Hood steals from the "rich" (government,s taxpayers and future tax payers who mortgage their futures) and gives to the poor (the student today) taking a nice slice along the way.

How does this happen?

(I sound like my parents's scary!)  Back in the olden days when I went to college, college had several "features" that no longer exist, as far as I know: quadruple rooms, classes Monday mornings and Friday afternoons, and bad food.

Superior housing requires, well, building more housing.  Only one way to finance construction: revenue.  Endowments aren't earning it, so tuition must.

Four day weekends every week come at a very high price.  Holding classes for the same number of students, with the same size classes, requires more buildings.  I'd love to see classroom utilization rates for the past thirty years.  (Imagine if GE said we're only manufacturing on Tuesday, Wednesday and Thursday.  Sure, they'd build more factories, hire more people to work in those factories, but productivity would plummet.)

Better food, same story.  Running gourmet restaurants ain't cheap.

Here's an idea: want government grants?  Great, take classes at least four days a week.  Need student loans?  Fine, no single rooms.

Don't want to "stigmatize" students on financial aid?  Why not?  How about signaling that sound financial decision making requires sacrifice?